Music Broadcast, which runs Radio City, eyes acquisitions in Kolkata, MP

New Delhi, June 3 -- Jagran Prakashan Group's Music Broadcast Ltd (MBL), which runs FM brand Radio City, is looking to acquire local/smaller radio firms in places like Kolkata, Madhya Pradesh and Chhattisgarh after the three-year lock-in period under Phase 3 of radio privatization expires on 31 March 2018.
MBL, which currently runs 39 radio stations across the country, has already initiated acquisition talks with some potential targets, said Apurva Purohit, president, Jagran Prakashan.
"We have already started talking to a few players which have individual stations or small networks across the country. There are many cities where Jagran (newspaper) has a presence but Radio City doesn't. We will be identifying and targeting such cities for the next phase of expansion," said Purohit, adding that the company will expand its presence primarily in metros, mini-metros and cities with high advertising potential.
Radio City will only be able to acquire the radio stations that were operational before April 2015 and migrated to Phase 3 (from Phase 2) on 1 April 2015.
Regulations of the information and broadcasting (I&B;) ministry require licencees to maintain a shareholding of at least 51% for a minimum period of three years from the date the FM channels become operational. The lock-in period for the stations that were operational in Phase 2 started on 1 April 2015.
The idea behind the acquisition plan, Purohit said, is to expand Radio City's footprint to 65% of India's population, from the current 62%. The company currently has operations in cities including Patna, Delhi, Mumbai, Hyderabad and Chennai. MBL also operates the web radio portal PlanetRadiocity.com.
Going forward, the company plans to organize outreach programmes to tap the local advertising market. "We are educating local advertisers about the power of radio as an advertising medium. The plan is to increase the share of local ad revenue to 60% from current 40%," said Purohit.
Media experts say that consolidation will get underway in the radio sector once the lock-in period expires.
"Rules for Phase 3 FM auction have been stringent and reserve prices were high. Consolidation seems to be the way forward as companies vie for share in smaller markets," said Priyanka Chaudhary, director at Grant Thornton India LLP.
For the year ended 31 March, MBL earned revenue of Rs 271.4 crore, a 20% jump from the previous year. The company earned Rs 225.50 crore in revenue in 2015-16. In March, MBL raised as much as Rs400 crore through an initial public offering.
According to a report titled 'Media for the masses: The promise unfolds' by consulting firm KPMG and lobby group Federation of Indian Chambers of Commerce and Industry, the radio industry is expected to grow at a compound annual growth rate of 16.1% between 2016 and 2021 and is projected to be a Rs 4,780 crore industry by 2021. Currently, the industry is valued at Rs 2,270 crore.
HT Media, publisher of Mint, operates radio channels under the Fever 104 FM and Radio Nasha brands that compete with Music Broadcast's stations in some markets.
Published by HT Digital Content Services with permission from MINT.